[9924] in Commercialization & Privatization of the Internet
Re: IIA Breaks Out
daemon@ATHENA.MIT.EDU (Russell Nelson)
Thu Jan 27 10:01:14 1994
Date: Wed, 26 Jan 1994 23:40:27 EST
From: "Russell Nelson" <nelson@crynwr.com>
To: "Brock N. Meeks" <brock@well.sf.ca.us>
Cc: com-priv@psi.com
On Wed, 26 Jan 1994 16:50:36 -0800, "Brock N. Meeks" <brock@well.sf.ca.us> wrote:
> He said the credit card number was needed because the company
> providing the 800 number access to the IIA host computers needed it
> to bill people, at 20 cents per minute.
...
> You do the math: Figure 40,000 users (if the IIA grows no bigger than
> current applications) dialing in 10 hours a month. If they use the 800
> number that whole time, IDT racks in a whopping $4.8 million PER MONTH in
> access fees alone. Free my ass.
That assumes that they get to keep all twenty of the cents. They
probably only get to keep a nickle. That means $1.2 million per month.
They might get a penny or two more than that, but they'll also have
some people calling in direct, which results in no revenue for them.
The costs I see are $176K/month. Either I've vastly underestimated
some costs, or IIA is going to be vastly profitable.
Here's my analysis:
Phone lines:
Figure that these people are mostly going to want to call in between
6:00 and 10:00 PM. That's four hours/day, 30 days/month. At 10
hours/month, one phone line will serve 12 users. That adds up to
3,333 phone lines. That assumes that none of your 40,000 users gets
a busy signal during prime time. If you want to blow off half your
users, assuming that they'll call in other times, you could get away
with one half the lines. Lets work with 1,666 simultaneous users.
Equipment:
Let's say the phone lines cost you $20 each (you might get them for
less, but you'll have equipment costs, etc). That's $33K/month,
but that's only the phone lines. You also have modems and machines.
Assuming a rack mount modem costs $300, that's a half a million bucks
in modems. Debt service on that will be 1% per month, so that's
another $5K/month. Assume that you can support eight users with a
$2K PC running Linux, that's 208 PCs at $400,000. Again, assume debt
service of 1% for $4K/month. You'll also need some amount of network
to tie them all together, let's allocate $100K for that ($1K/month).
You'll also need some big servers, let's allocate $200K for that
($2K/month).
Internet access:
If everyone runs a WWW client, they'll be running your bitpipe at
full speed between 6PM and 10PM. You'll need 23Mbps max. But you'll
never *really* need that much speed. Four T-1's ought to do it.
Assume two to the CIX and two to NSFNet. That's $13K/month.
People:
Gotta assume 24x7 coverage, which means $60K/person/year times six
people which adds up to $30K/month. That's just technicians to keep
things running. Assume that everyone sends you one piece of
email/day. Assume that one person can deal with 120 pieces of email
(that require a reply) per day. That means 14 technical support
people. Again, assume $60K/person/year. That adds up to $70K/month.
Assume a couple of managers at $100K/person/year, another $16K/month.
Facilities:
I have no clue what facilities are going to cost you. Given the
amount of office space that's available in the US, the portability of
the business, and the desirability of having it in town, say
$2k/month. A drop in the bucket.
--
-russ <nelson@crynwr.com> ftp.msen.com:pub/vendor/crynwr/crynwr.wav
Crynwr Software | Crynwr Software sells packet driver support.
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